Singapore (Platts)--6May2011/220 am EDT/620 GMT

China's Ministry of Commerce has issued a directive asking all local governments and state-owned oil majors to crack down on "illegal" activities related to sales of fuels, ahead of the peak summer demand season.

According to the notice issued on Thursday, several enterprises or individuals have recently started to build non-approved storage and refueling facilities, wholesalers have increased prices by unreasonable levels, and retail stations were selling fuels with product tie-ins following runaway international crude prices and the onset of peak summer demand for refined products.

"These illegal activities harm consumers interest and severely disrupt market order," the ministry said.

The ministry has ordered local authorities to halt construction of retail stations that have been been granted approvals and to crack down on illegal "refueling network and mobile refueling trucks."

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Local governments are also directed to punish wholesalers that violate pricing policies, arbitrarily raising wholesale prices and other activity that do not conform to government regulations.

The ministry also called upon local authorities to find and punish sellers that dilute fuels with other substances such as ethanol and methanol, and asked local departments to ensure ample market supplies to avert any shortages during the peak demand season.

--Calvin Lee, calvin_lee@platts.com